Government & Politics

Kansas House panel pans flat tax in light of budget woes

Shawn Sullivan, left, Kansas Gov. Sam Brownback's budget director, confers with J.G. Scott, center, the chief fiscal analyst for the Kansas Legislature's research staff, and Senate Majority Leader Jim Denning, R-Overland Park, right, following a meeting of the Senate Ways and Means Committee, Monday, March 20, 2017, at the Statehouse in Topeka, Kan. The committee is proposing a two percent pay raise for most state workers.
Shawn Sullivan, left, Kansas Gov. Sam Brownback's budget director, confers with J.G. Scott, center, the chief fiscal analyst for the Kansas Legislature's research staff, and Senate Majority Leader Jim Denning, R-Overland Park, right, following a meeting of the Senate Ways and Means Committee, Monday, March 20, 2017, at the Statehouse in Topeka, Kan. The committee is proposing a two percent pay raise for most state workers. The Associated Press

A pair of bills that would tax Kansans’ income at one flat rate received lukewarm support from lawmakers and lobbyists during hearings Monday afternoon.

One of the bills would have actually cost the state millions as it faces projected budget shortfalls of more than $1 billion through June of 2019.

The bills were the latest attempt by lawmakers to find a tax plan that would raise more revenue, but with enough votes to overcome likely opposition from Gov. Sam Brownback.

The bills represented a sharp turn from the plan lawmakers passed in both the House and Senate earlier this year that raised income tax rates on high earners and brought back a third tax bracket.

The first of the flat tax plans, House bill 2385, would raise more than $100 million over a two-year span by tweaking the nicknamed LLC exemption for roughly 330,000 business owners, though it wouldn’t repeal the signature Brownback policy.

It would also tax individual income at a single rate of 3.9 percent.

The other piece of legislation, House bill 2395, would cost the state $82.8 million next year, according to official estimates.

The bill left the tax exemption for roughly 330,000 business owners in place and taxed income at a 5 percent rate for individual filers making more than $10,000 and married joint filers making more than $20,000. Kansans who earned less than that would pay no income tax.

The state currently uses a two bracket system, with a bottom rate of 2.7 percent and a top rate of 4.6 percent. A third bracket and higher rates were thrown out by Brownback’s tax cuts in 2012.

The flat tax idea has been touted by Kansas conservatives as a possible path forward while income tax debates have stalled in recent weeks.

But moderate Republicans and Democrats were quick to say they would not support the move to a flat tax system.

Lawmakers on both sides said after Monday’s hearing that both flat tax bills didn’t seem likely to get much traction in the House.

“If you look at the first bill (HB 2385) it actually makes the current problem worse,” said Rep. Tom Sawyer, a Wichita Democrat. “It takes the Brownback tax plan (and) puts it on steroids.”

Rep. Steven Johnson, the Assaria Republican who leads the committee, said lawmakers were not given evidence of how the flat tax proposals would be fair or sufficient.

“It certainly didn’t have traction in the meeting today,” Johnson said. “We would need to see support for the idea to be able to carry it forward.”

Hunter Woodall: 785-354-1388, @HunterMw

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